Medicare Advantage, a program that offers HMO-type coverage for Medicare beneficiaries, was strongly criticized by President Barack Obama in 2009.
The president proposed in his 2010 fiscal year budget to slash reimbursement to health plans participating in Medicare Advantage.
The Obama administration estimated that making private payers with MA plans compete for services would generate $177 billion over 10 years.
In another blow to MA plans in 2009, the Centers for Medicare & Medicaid Services cut the national average fee-for-service growth rate for 2010 MA plans.
Rather than the anticipated 4.24 percent growth rate of 2009, CMS will give MA plans a 0.81 percent rate for 2010.
MA plans were likely paid $11.4 billion more in 2009 than the traditional Medicare fee-for-service program, according to study released this year by the Commonwealth Fund.
The study estimated that since Medicare Advantage was enacted in 2004, $43 billion in extra payments have been made to private plans.
“It is clear that private plans are continuing to substantially raise the cost of serving Medicare beneficiaries,” said Commonwealth Fund President Karen Davis. “Modifying these payments in 2010 is an excellent first step, but policymakers should examine whether or not these plans are the best use of Medicare dollars for the beneficiaries they were designed to serve.”
Brian Biles, MD, the study’s lead author, said the CMS payment reductions don’t address the factors responsible for the extra payments to MA plans.
“We have to ask ourselves if this is the best use of our healthcare dollars – or if those dollars could be better spent improving Medicare benefits for all beneficiaries or expanding health insurance coverage,” Biles said.
Thrown on the defensive, many payers have launched a vigorous defense of MA plans.
William Krenz, executive vice president of Medicare Advantage operations for Universal American Insurance, said Universal’s MA plans are well-managed, focused on wellness and include additional benefits that are “well appreciated and used” by its members.